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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: JimisJim who wrote (177540)	3/30/2013 3:52:32 AM
From: teevee	Read Replies (1) \| Respond to of 206151

Where can I find roby's analysis? Thank you.

To: JimisJim who wrote (177540)	3/30/2013 6:48:57 AM
From: Ed Ajootian	1 Recommendation Read Replies (5) \| Respond to of 206151

JimIsJim, Robry has clearly lost it with this call for gas to be priced at parity to oil by 4/14. Teevee, robry's data is posted most weekdays at the BRY board on www.investorvillage.com, just do a search for posts from robry825. I don't see gas prices going much higher than $4, until such time that Lower 48 production starts to decline. According to a 2/28/13 study by Bentek, whose production projections have been amazingly accurate over the last year or so, Lower 48 production will actually increase about 2 bcfd this year vs. last year. I believe much of this increase will be offset by a decrease in net Canadian imports of about 1 bcfd together with an increase in Mexican exports of about 0.5 bcfd so overall supply should stay fairly stable. But it certainly doesn't look like it will decrease very much if at all. The biggest reason I see $4 as being a cap on natty prices is the gas-to-coal switching that is expected to occur at prices over $4. See recent comments from Tudor Pickering on this point below. Contrary to Robry, I believe natty remains locked in a somewhat tight range, say $3.25 --- $4, with any deviations outside of that range to be limited in duration and caused by extreme weather events. This last winter, wherein natty prices remained below $3.50 for most of the winter, together with about average temps, saw a draw that was too high to enable storage to stay in balance -- over 2.25 TCF of draws vs. 5 yr. average of 2.05 TCF. OK so fine, that means that we need prices to probably average > $.3.50 in subsequent winters in order to keep storage in balance. But I think once they get over $4 the pendulum would start swinging the other way. Comment from Tudor Pickering on 3/27 (taken from a post on a forum at the firstenercastfinancial.com site): "Coal to gas switching – After seeing the difference in dispatch costs (Eastern coal less CCGT gas) rise to as high as $16.50/MWh in April ’12, the difference now is only ~$1.50/MWh in favor of gas. Remember that coal to gas switching isn’t binary, especially for coal plants, as there is a wide disparity in dispatch costs. A number of coal plants will turn on at around $4/MMBtu. Coal plants that will start turning on at this gas price (~$4/MMBtu) typically are lower heat rate ~10/MMBtu/MWh, reside in a region where gas basis is positive (i.e. Tetco M3), and have advantageous coal contracts with low transportation costs. PPL’s Brunner Island and Montour coal plants in Pennsylvania are perfect examples of plants that are cost competitive with CCGT assets right now. They are low heat rate, reside in the Mid Atlantic, and have in the money long term contracts with CNX. Gas at >$4/MMBtu is challenging to sustain as gas demand from power decreases and coal begins to displace gas generation in large quantities above $4 gas. "